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WTO to rule on Hynix import duties

EU, US tariffs lawful or not?

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The World Trade Organisation (WTO) has put in place the people who will decide if the tariffs imposed separately by the European Union and the US on imports of Hynix DRAM products are lawful, according to wire reports.

And now Japan is ready to follow suit with tariffs, following complaints by local manufacturer Elpida. It is to impose "countervailing" duties of 20-40 per cent against Hynix from the summer, Korean newspapers say.

The WTO move follows official complaints made to the WTO last year by the South Korean government on Hynix's behalf.

Those complaints followed the imposition of a 34.8 per cent import duty on Hynix DRAM goods coming into the EU, and a parallel 44.7 per cent duty on US imports. The tariffs were put in place after European and US commerce bodies ruled that Hynix had been on the receiving end of state aid outlawed by the WTO.

Local appeals made by Hynix against the duties failed, leaving it little choice but to ask the South Korean government to raise the matter with the WTO.

At the heart of the matter lie cash injections given to Hynix by a number of its creditor banks. Since some of those organisations were then fully or part-owned by South Korea, and Hynix would almost certainly have collapsed without them, rival DRAM makers Infineon and Micron claimed the rescue packages ran contrary to WTO regulations, which forbid member states from propping up uneconomic companies.

Hynix has always maintained that not all of the creditors behind the rescue funding were connected to the South Korean government, and of those that were, the government was in the process of yielding overall control. ®

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